Exam 12: Perfect Competition and the Supply Curve

Use the following to answer questions: Figure: The Profit-Maximizing Firm in the Short Run -(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. If the market price is P₄:

When perfect competition prevails, which of the following characteristics of firms are we likely to observe?

Use the following to answer questions: Figure: The Profit-Maximizing Firm in the Short Run -(Figure: The Profit-Maximizing Firm in the Short Run) Look at the figure The Profit-Maximizing Firm in the Short Run. At q₂, ATC is the vertical distance between q₂ on the horizontal axis and:

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will:

Use the following to answer questions: -(Table: Variable Costs for Lots) Look at the table Variable Costs for Lots. During the winter, Alexa runs a snow-clearing service in a perfectly competitive industry. Assume that costs are constant in each interval; that is, the variable cost of clearing anywhere from 1 through 10 lots is $200. Her only fixed cost is $1,000 for a snowplow. Her variable costs include fuel, her time, and hot coffee. If the price to clear a lot is $60, what is Alexa's profit per unit at the optimal output?

Use the following to answer questions: Figure: A Perfectly Competitive Firm in the Short Run -(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. The firm's total economic profit at its most profitable level of output is:

A perfectly competitive firm's short-run supply curve is its _____ cost curve above its _____ cost curve.

Which of the following is TRUE?

A perfectly competitive industry is in a state of long-run equilibrium. Which of the following must be TRUE?

Assuming a downward-sloping demand curve, a decrease in production costs for firms in a perfectly competitive market initially in long-run equilibrium will cause a(n):

Use the following to answer questions: Figure: Game-Day Shirts -(Figure: Game-Day Shirts) Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market. His costs are identical to the costs of the other 9 vendors. If the price of a shirt is $6, the short-run industry supply will be _____ shirts.

Use the following to answer questions: Figure: The Marginal Decision Rule -(Figure: Marginal Decision Rule) Look at the figure The Marginal Decision Rule. To the left of point C (e.g., at q₁):

Which of the following is NOT an assumption that economists make when using the model of perfect competition?

In the short run, if P < AVC at the quantity where MR = MC, a perfectly competitive firm produces _____ and takes an economic _____.

The shut-down point in the short run is:

Use the following to answer questions: -(Table: Cherry Farm) Look at the table Cherry Farm. If Hank and Helen have one of 100 identical farms in the perfectly competitive cherry industry, explain how Hank and Helen and the industry will react in the short run and the long run to a price of $3.75 per pound for cherries.

Use the following to answer questions: Figure: The Perfectly Competitive Firm -(Figure: The Perfectly Competitive Firm) Look at the figure The Perfectly Competitive Firm. The firm faces demand curve d and maximizes profit. In a long-run equilibrium, this firm will produce _____ units of output and sell its output for _____.

Use the following to answer questions: Figure: A Perfectly Competitive Firm in the Short Run -(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly Competitive Firm in the Short Run. If market price is G, the firm's total revenue from the sale of its most profitable level of output is:

Use the following to answer questions: Figure: Game-Day Shirts -(Figure: Game-Day Shirts) Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market. His costs are identical to the costs of the other 9 vendors. If the price of a shirt is $14, in the long run:

Use the following to answer questions: -(Table: Total Cost for a Perfectly Competitive Firm) Look at the table Total Cost for a Perfectly Competitive Firm. If the market price is $4.50, profit at the profit-maximizing quantity of output is: